Cullan and Cullan LLC v. M-Qube, Inc.

United States District Court, D. Nebraska

September 27, 2016

CULLAN AND CULLAN LLC, individually and on behalf of all others similarly situated; Plaintiff,v.M-QUBE, Inc. a Delaware corporation; MOBILE MESSENGER AMERICAS, Inc., a Delaware Corporation; CF ENTERPRISES PTY., Ltd., an Australian Company; and JOHN DOES 1-200, Defendants.

MEMORANDUM AND ORDER

Joseph
F. Bataillon, Senior United States District Judge.

This
matter is before the court on the plaintiff's motions for
preliminary approval of class action settlements, Filing
Nos. 165 and 167, and on Intervenor Richard
Geier's motion to withdraw as intervenor, Filing No. 187.

I.
BACKGROUND

Geier
had objected to the motion for preliminary approval. Filing
No. 169, Response (properly denominated as
“Objection”). In an earlier order, this court
granted Richard Geier leave to intervene in the action to
object to the parties' proposed settlement. See Filing
No. 74, Memorandum and Order ("Mem. & O.").
Geier was the named plaintiff in a separate purported class
action suit against defendant Mobile Messenger in the United
States District Court for the Eastern District of Washington.
See Geier v. M-Qube, Inc., Case No. 2:13-cv-00354
(W.D. Wash.) (the “Washington Action”). He has
now shown that he has voluntarily dismissed with prejudice
his claims in the Washington action and no longer has an
interest in this action. The court finds Geier's motion
to withdraw should be granted and his objections to the
proposed settlement will be denied as moot.[1]

This is
a putative class action involving an alleged practice known
as “cramming, ” that is, placing unauthorized,
misleading, or deceptive charges on a consumer's
cell-phone bill. The plaintiff, a law firm in Omaha,
Nebraska, alleges that it was billed for unauthorized
subscriptions on its wireless telephone bill. Id. at
5. It asserts a claim for violations of the Telephone
Consumer Protection Act (“TCPA”), 47 U.S.C.
§ 227 et seq., and for tortious interference with a
contract and unjust enrichment under state law.

This
court has twice denied the parties' motion for
preliminary approval of class action settlements. Filing
Nos. 74 and 97. The facts are set out in those
earlier orders and need not be repeated here. See Filing No.
74, Mem. & O. at 2-8; Filing No. 97, Mem. &
O. at 1-3. With respect to the parties' first proposals,
this court stated it was troubled by numerous aspects of the
class action settlement, including the fact that the
settlement funds appeared inadequate in view of the size of
the class and the magnitude of losses. The court also
expressed concerns about the efficacy of the notice process
and the extent to which the proposed settlement would
actually benefit class members. Filing No. 74, Mem.
& O. at 18. On the parties' second proposal, the
court remained unable to ascertain the size of the potential
class and noted that the notices to the putative class
remained inadequate. Filing No. 97, Mem. & O. at 3-4.

The
parties now propose two separate class action settlement
agreements, one with defendant CF and one with defendant MM.
See Filing Nos. 166-1 and 168-1, Proposed Amended and
Restated Settlement Agreements. For the purposes of
settlement, the parties agree to certification of the
following classes:

The CF
Enterprises Settlement Class is defined as:

[A]ll
current and former Wireless Subscribers Nationwide, who at
any time from January 31, 2011, to the Notice Date, received
a text message from any Message Claim Shortcode or relating
to a Message Claim Program. “Message Claim
Shortcode” means the following shortcodes: 25872,
29104, 33288, 44329, 49712, and 70451. “Message Claim
Program” means the following programs:
searchyourhoroscope.com; tuneztogo.com; hearmemobile.com;
myringtonespot.com; cellsafari.com; tonezgalore.com;
urzodiachoroscopes.com; and fonezoneportal.com.

The
Mobile Messenger Settlement Class is defined as:

[A]ll current and former Wireless Subscribers Nationwide, who
(a) at any time from January 1, 2010, to the Notice Date,
incurred any charge, whether paid or not, associated with any
of the billing descriptors, shortcodes, and program names set
forth on Exhibit B [to the Mobile Messenger Settlement
Agreement and posted on the Settlement Website]; or (b) at
any time from January 1, 2010, to the Notice Date, received
any message from a Premium Short Code registered at the CTIA
to (i) any organization recognized as exempt from federal
income taxation under I.R.C. § 501(c)(3) or
I.R.C. § 501(c)(4), or (ii) federal political
committees registered with the Federal Election
Commission.[2]

Under
the Amended and Restated Stipulation of Settlement between
the plaintiff and MM (“MM Settlement Agreement”),
the settlement class consists of consumers who received text
messages from any one of hundreds of different short codes.
SeeFilingNo. 168-1, Ex. 1, Ex.
B. It provides the Settlement Class members will receive $30
per unauthorized charge for claimed unauthorized mobile phone
charges associated with the any of the billing descriptors,
shortcodes, and program names set forth on Exhibit B to the
Settlement.[3] There is no monetary cap on MM's
payment of valid claims submitted under this provision. Also,
MM will pay all costs of providing Notice of the Settlement
to the Settlement Class and the Costs of Claims
Administration. MM also agrees to pay Proposed Co-Lead
Settlement Class Counsel, subject to Court approval, an
amount up to $485, 000 in attorneys' fees and
reimbursement of costs and expenses. MM also agrees to pay,
subject to Court approval, a Class Representative incentive
award to Plaintiff in the amount of $2, 500. Those payments
are separate and in addition to the other amounts due the
Class under the settlement. The proposed agreement allows MM
to challenge claims based on a consent defense only if they
present clear and convincing evidence and provides a
mechanism whereby the issue of whether a potential claimants
had consented can be resolved by a special master.

In
exchange for those benefits, the MM Settlement Agreement
includes a release that is tailored to the unique posture of
this litigation.[4] It provides that each Settlement Class
member who does not submit a valid claim will continue to
have the right to pursue litigation against Mobile Messenger
or any other Released Party-as described specifically in the
Settlement-on an individual basis; only their right to
participate in a class action or mass action will be
released. The Parties released under the Agreement are Mobile
Messenger, as well as their respective predecessors and
successors, and their past and present officers, directors,
employees, attorneys, representative, agents, and
stockholders, with the exception of Darcy Wedd, Erdolo Eromo,
Michael Pajaczkowski and Fraser Thompson, who have been named
in governmental actions based on or related to the facts and
circumstances underlying this Action.

The
Amended and Restated Stipulation of Settlement between the
plaintiff and defendant CF (“CF Settlement
Agreement”) applies to a subclass of consumers who
received text messages from one of six different short codes
and provides that class members-persons who received one or
more text messages from identified CFE Shortcodes or related
to identified CFE Message Programs-will receive $65 per text
message claimed, up to 3 messages per CFE Settlement Class
member. It provides, however, that if the value of valid
claims exceed $1, 000, 000, the claims will be prorated. It
also contains provisions substantively similar to those
outlined above with respect to the MM Settlement Agreement.

The
claims process requires each class member to provide name,
address, telephone number and email address and to state to
the best of their knowledge and recollection the wireless
number associated with the charge and (a) the date
description, and amount of each charge for which a refund
benefit for a Subscription Charge Claim is requested; (b) a
statement that each such charge was unauthorized; (c) the
total amount of the refund benefit requested for the
Subscription Charge Claim; and (d) confirmation that the
Settlement Class member' did not request or receive a
refund from any source for the charges for which a Refund
Benefit for a Subscription Charge Claim is requested.
However, if the Settlement Class member has no knowledge or
recollection, the Settlement Class member may state that he
or she does not know. Further the Agreements provide that the
Claims Administrator may reject a claim if it is shown and
verified that the claimant was previously provided a refund
or credit from any source (including, but not limited to
Mobile Messenger, a Wireless Carrier, an Aggregator, a
Third-Party Content Provider, or through a different
settlement) for the charge that is requested for refund in
the claim. The Agreements also provide a resolution procedure
for challenged or rejected claims and the claim form will
disclose the defendants' right to challenge any claims
they have reason to believe are invalid. The Agreements also
provide procedures whereby settlement class members can
opt-out or object to the Settlements.

The
parties, in consultation with the proposed Claims
administrator, have designed a notice plan targeted at the
smartphone market. The Notice Plan includes: (1) individual
direct email notice to any potential Settlement Class members
that can be identified from Defendants' records; (2)
mobile notice using paid banner notices on targeted website
and applications; (3) web-based notice using
“keyword” searches displaying banner notices; (4)
targeted social media banner notices; (5) a press release
distributed nationwide through PR Newswire; (6) a dedicated,
informational website dedicated to ...

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